The Effects of Price Dispersion and
Suggested List Price

on Consumers’
Internal Reference Prices

Etta Y. I. Chen and Lien-Ti Bei, National Chengchi University

Abstract

The
purpose of this study is to explore the effects of price dispersion and the
moderating effects of suggested list prices (SLP) and brand image on consumers’
internal reference prices (IRP).  The
results show that high price dispersion enlarges the variance of consumers’ upper
boundaries and the IRP ranges. 
Furthermore, it also brings down consumers’ lower boundary IRP and
enlarges the IRP range.  However, the SLP
from brand owners may reduce the effects of price dispersion on the variance of
IRP.  The findings suggest that policy
makers should closely monitor price dispersions to protect consumers’
interests.  Meanwhile, a reasonable policy
would be helpful to regulate brand owners on providing a deceptive SLP.

Key
words: Price dispersion; Reference price; Brand image; Price perception